More fines could follow the UK Financial Services Authority’s £5.25m settlement with Aon
The Financial Services Authority fined Aon £5.25m after the company identified 66 irregular payments to foreign parties operating in Bahrain, Bangladesh, Bulgaria, Burma, Indonesia and Vietnam. It ruled there had been a breach of Principle 3 (systems and controls) of the FSA’s Principles for Business but gave Aon a 30% discount because the company took the problem to the authority.
The FSA wrote to firms in 2007 and again last year, urging them to ensure they had appropriate anti-corruption systems and procedures in place. It said at the time that a number of incidents had been reported.
Peter Burrell, a partner at Herbert Smith LLP, said the UK’s lack of enforcement in this area had received “significant attention”, particularly compared with the US, and that it had been expected that the Serious Fraud Office would take action rather than the FSA.
The FSA’s move, however, is more in tune with the Law Commission’s Draft Corruption Bill, which proposes a new offence for companies of negligently failing to prevent an act of bribery by a person performing services on behalf of a company, offset by an “adequate systems” defence.
Burrell warned: “Assuming the Bill is enacted in its current form, the risk of corporate prosecution for failures like Aon’s will be placed in even sharper focus.”
Last month the FSA said it was reviewing the systems and controls in place at a number of commercial insurance intermediary firms for preventing illicit payments and inducements particularly through overseas third parties. “Following the results of that project we will consider whether to undertake any wider thematic work,” said a spokesman.
Ali Sallaway, a partner at Freshfields Bruckhaus Deringer LLP which represented Aon, said the review shows the FSA’s “clear intention” to focus on the need for appropriate controls to counter the risks associated with making third party payments, particularly in areas where the risk of corruption was high.
“Its recent comments regarding financial institutions more generally indicates that it will take robust action where appropriate if firms are found wanting in this area,” she said.